In 2023, the global economy defied expectations of a recession as central banks successfully tackled high inflation. Instead, the global GDP likely grew by 3%, indicating overall economic stability. The labor markets remained resilient, and inflation started to decrease. Additionally, stock markets experienced a significant growth of 20%.
However, behind these aggregate indicators, there are significant differences among countries. The Economist compiled data on five economic and financial indicators - inflation, inflation volatility, #GDP, #employment, and stock market performance - for the 35 wealthiest nations. These countries were ranked based on their performance in these indicators, with an overall score calculated for each.
#Greece emerged as the top-performing economy in 2023, marking its second consecutive year at the top. This is a remarkable achievement for an economy that was once synonymous with inefficiency. The United States secured the third position, closely followed by #Canada and #Chile. On the other hand, several countries in Northern Europe, including the United Kingdom, Germany, #Sweden, and #Finland, lagged behind.
The fight against rising prices was a significant challenge in 2023. The first indicator, which considers "core" inflation excluding volatile components such as energy and food, provides insights into the underlying inflationary pressures. #Japan and #South Korea managed to contain price growth, while #Switzerland saw a modest increase of only 1.3% in core prices on an annual basis. However, many European countries continued to face significant inflationary pressures. #Hungary, for example, experienced an annual core inflation rate of around 11%, while Finland also struggled.
The next two indicators, employment growth and GDP, shed light on how well the economy benefits ordinary people. #Ireland showed the worst performance with a 4.1% decline in GDP (although this figure should be approached with caution due to measurement issues). Both the United Kingdom and #Germany also faced challenges. Germany grappled with the consequences of surging energy prices and increased competition from imported Chinese automobiles, while the #United Kingdom continued to deal with the aftermath of #Brexit.
The United States demonstrated strong performance in both GDP growth and employment. It benefited from record-high energy production and the effects of generous budgetary stimulus implemented in 2020 and 2021. As the world's largest economy, the United States potentially lifted other countries as well. Canada experienced a sharp increase in employment, and despite the conflict with Hamas, #Israel, considering the #United States its largest trading partner, secured the fourth position in the overall ranking.
One might expect the American stock market, filled with companies poised to capitalize on the #artificial intelligence revolution, to excel. However, when adjusted for inflation, it performed averagely. The #Australian stock market, dominated by commodity companies that rebounded from high prices in 2022, showed lackluster results. Stock prices in Finland declined, while Japanese firms experienced somewhat of a revival. The country's stock market demonstrated one of the best performances this year, increasing by nearly 20% in real terms.
For exceptional stock returns, one should look thousands of miles west - to Greece. The real value of the Greek stock market surged by over 40%. Investors have taken a fresh look at Greek companies as the government implements a series of market reforms. Although the country is still much poorer than it was before its grand collapse in the early 2010s, the #IMF, once a staunch critic of Greece, highly praised the "digital transformation of the economy" and the "strengthening of market competition" in a recent statement. While the lagging Finns may find solace this Christmas by drowning their sorrows in saunas or beer, as the locals call it, the rest of the world should raise a glass of ouzo to this unexpected champion.
In conclusion, the global economic landscape in 2023 showcased a mix of stability and disparities among countries. While some nations excelled in managing inflation, promoting employment, and achieving GDP growth, others faced challenges and lagged behind. The performance of stock markets also varied, with Greece emerging as a surprising leader. As the world continues to navigate economic uncertainties, it is crucial to monitor these indicators and learn from the successes and struggles of different economies.
